Exclusive: Finance Ministry sought Cabinet approval for PLUS takeover twice despite objection

Syed Jaymal Zahiid
According to a source, the Cabinet was presented with a proposal where the government has to take on PLUS liabilities via a SPV. — Bernama pic

KUALA LUMPUR, Jan 18 ― A senior minister had sought Cabinet’s approval to take on PLUS Malaysia Bhd’s assets and liabilities via a special purpose vehicle (SPV), a move that would have made Putrajaya the new owner of the toll operator instead, according to a government source.

Malay Mail understands that the proposal was submitted twice, first at a Cabinet meeting on January 8, and again on January 15 ― the latter was done despite the Cabinet agreeing that PLUS ownership should remain with Khazanah Nasional Bhd and Employees’ Provident Fund (EPF) in the previous meeting.

Under that proposition, the government would have transferred ownership of PLUS through a SPV. This would entail taking on the toll operator’s RM30 billion debt, the source said.

But the proposal met stiff opposition, added the source who wished to remain anonymous do the sensitive nature of the issue.

Within the Cabinet, there are views that government ownership of PLUS would have subsequently justified the controversial RM6.2 billion buyout of four toll concessionaires owned by Gamuda Berhad, previously proposed by the Ministry of Finance (MoF) last year.

“The Cabinet was presented with a proposal where the government has to take on PLUS  liabilities via a SPV, and this structure means the government can also do the same with Gamuda,” the source added.

Malay Mail has reached out to said minister and the Prime Minister’s Office (PMO) for their comments, but received no response at the time of writing.

In June last year, the MoF offered RM6.2 billion to acquire four toll concessionaires within the Klang Valley: Lingkaran Trans Kota Sdn Bhd (Litrak), Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (SPRINT), Kesas Sdn Bhd, and Projek SMART Holdings Sdn Bhd.

Gamuda owns a 44 per cent stake in Litrak, a 52 per cent stake in SPRINT, a 70 per cent stake in Kesas, and a 50 per cent stake in SMART.

The MoF had said that buying Gamuda would have given the government power to lower the toll rates of these highways, which would benefit the city’s low-income population.

But the bid quickly drew criticism even among several Cabinet members, who along with the Opposition lawmakers felt the deal would have effectively bailed Gamuda out.

Detractors said the proposed acquisition made little financial sense since the concession of the four Gamuda-owned highways will end by 2028.

After years in the red, Gamuda posted moderate earnings in the fourth financial quarter ended July 31, 2019, with a net profit of RM184.95 million compared to a net loss of RM103.64 million the year before.

Last month Putrajaya again extended the deadline for the negotiations to buy the four highway concessions to February 29 this year from December 31, 2019.

It is the third postponement since the first August 2019 deadline. The second deadline was previously October 2019.

This comes as the PMO said yesteray PLUS will remain under Khazanah and EPF ownership and keep all assets and liabilities, including bearing all operation and maintenance costs under a new 20 year concession that will see toll rates cut but by nearly a fifth.

The reduced charges will take effect February 1 until the concession ends in 2058.

Putrajaya is expected to save RM42 billion from the arrangement since it would not have to pay compensation to keep the rates fixed, the PMO said.

Yesterday, Prime Minister Tun Dr Mahathir Mohamad denied that he was behind the decision of to retain PLUS under Khazanah and EPF, saying it was decided by the two firms as it was the “best decision” after carefully considering the offers from other parties.

Related Articles Dr M: Khazanah made decision to keep PLUS, not me EPF welcomes govt’s move not to privatise PLUS Khazanah to work closely with govt, PLUS on toll restructuring